We will get a new report on inflation on Wednesday this week which is likely to show year-over-year inflation still running at above 8%. That’s the really bad news.
But there is some good news. Regular readers know that we like to look at four forward-looking indicators of inflation. Good news. They are all pointing to a gradual fall in the inflation rate in the months ahead.
1 - Commodity prices:
The CRB index is still high, but down roughly 15% from its peak in June.
2 - The TIPS spread (which is the difference in the yields between U.S. Treasury bonds and Treasury Inflation-Protected Securities)
It peaked in April at 3% and is now at 2.4%.
3 - The price of gold
Gold has always been considered the ultimate hedge against inflation. It hit $1,860 an ounce in June and is now $1,765.
4 - The interest rate on the 30-year Treasury bond.
Not much movement. It was at 3.43% and is now slightly lower at 3.25%.
We expect that in the coming months the inflation rate will fall from 8.6% to the 5 to 6% range. Alas, that’s still well above the Fed target of 2%.
Inflation is coming down because demand is falling (in large part because of the recession) and because the Fed has begun to raise interest rates thus reducing monetary growth.
2) Will New Jersey’s Democratic Senators Stick A Knife In The Back To Home-State Pharmaceutical Companies
New Jersey advertises itself as the “Medicine Chest of the World.” Nine of the largest drug companies in the nation are either headquartered in, or have major operations clustered in the Garden State. (See list below.)
State officials boast that we are “proud champions of the life sciences industry.”
Oh REALLY? Apparently, no one sent that memo to the two Democratic NJ senators in Washington: Cory Booker and Bob Menendez.
We reported on Friday that the major “pay for” in the Democrats’ latest scheme to pass another budget-busting Build Back Better spending bill is to impose price controls on American pharmaceutical companies. Chuck Schumer thinks he can squeeze as much as $250 billion over the next decade out of “Big Pharma” with these drug price caps.
Obviously, the biggest loser from drug price controls will be Americans with diseases ranging from cancer to Parkinson’s to Alzheimer's. Capping prices on life-saving drugs means less innovation and delays in bringing new wonder drugs to market. Drug price controls literally kill people.
The state that would be the biggest loser here is New Jersey. Yet, at this moment, we are told that both NJ senators, Cory Booker and Robert Menendez are yes votes for this attack on their home state industry.
This would be like Texas senators voting against oil, Idaho senators voting against potatoes, and Michigan senators voting against cars.
We would strongly recommend that if this bill passes with New Jersey’s senators providing the critical votes needed (every Republican will vote no), it’s time for America’s top drug companies to find a new home base – like Texas, Florida, or Nebraska.
Yes, we’ve said it umpteen times, but here is a graphic that hammers the point home. Green energy is a fool’s errand. We need an all of the above energy policy – including coal.
4) The Tragedy Of Sri Lanka: A Cautionary Tale On “Going Green”
This story is almost too bizarre to believe.
Guess what country has one of the highest ESG (environment/social justice governance) scores in the world?
Yes, Sri Lanka.
Oh, wait. Things aren’t going so well there.
You’ve probably heard that Sri Lanka is in a state of total economic collapse and anarchy. The schools and businesses are shut down. The nation has run out of fuel. Last weekend, violent demonstrators stormed the official residence of the President and then set fire to the residence of the Prime Minister. Both officials have announced they will resign.
There are many factors behind Sri Lanka’s demise, but green policies are one of them.
Sri Lanka was self-sufficient in food production until 2021. Then-President Gotabaya Rajapaksa issued an overnight ban on all synthetic fertilizers and pesticides in a drive to promote “organic agriculture.”
The production of rice, a staple of the Sri Lankan diet, fell by between 40 and 50% nationwide. Food prices rose by over 80% and now there are severe shortages, which has led to malnutrition and widespread hunger.
Michael Shellenberger, a liberal analyst who specializes in environmental issues, reports that Sri Lankan leaders “fell under the spell of Western green elites peddling organic agriculture and ‘ESG.’” Sri Lanka’s leaders bought into myths that organic farming is trouble-free and that pesticides and fertilizer were dangerous.
The enviros got what they wanted. Sri Lanka has a near-perfect ESG score (98) which is higher than Sweden (96) or the United States (51). It also can’t feed its people and it has run out of nearly everything.
Last week, we reported on California Governor Gavin Newsom’s lame attacks on Florida and their Republican Governor Ron DeSantis.
Newsom spent $105,000 to run ads in Florida claiming that "Freedom is under attack in your state.” He proceeded to accuse DeSantis of banning books, voter suppression, and abortion crackdowns and said residents should either fight back or move to California.
GOP operative Trey Radel prepared a creative rebuttal ad taking down Newsom over California’s lockdowns, soaring crime rates, and sky-high taxes.
DeSantis responded with a speech in Cape Coral that dripped with sarcasm.
As [Newsom] was locking down his citizens, he would then go and have these extravagant dinners at the French Laundry to basically rub his citizens’ noses in the fact that he was treating them like peasants. In Florida we weren’t locking them down, we lifted our people up. We made sure to protect individuals’ freedoms.
